How Do Future of Work Companies Perform in a Crisis

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Last quarter, we launched the Future of Work Global Index to track and benchmark technology companies focused on the transformation of work. The world has changed in just 3 months. The global Coronavirus pandemic has immediately changed global economies, industries, and the future of work itself. A large portion of the workforce has now forcefully embraced remote work. A record 3.28 million US workers applied for unemployment benefits last week and hiring has come to a stand-still. Enterprise learning vendors have seen a significant uptick in usage over the last month.

We have watched the Future of Work Global Index in real-time and have been fascinated to observe how the index has performed over the last quarter. Overall, the Future of Work Global Index has performed extremely well during this time of uncertainty, market volatility, and looming recession.

Source: The Acadian Company, LLC, March 2020

Where most major indexes have fallen between 14–24%, the Future of Work Global Index in aggregate has remained relatively flat since the beginning of the year. Gains in January and February were offset by the impact of the Coronavirus pandemic in March. If you compare other indexes, notably the S&P 500 and the Dow Jones Industrial Average, down 21% and 24 % respectively, the Future of Work Global Index is down only 2% on a weighted basis and up 0.1% on an aggregate basis.

Source: The Acadian Company, LLC, March 2020

As you might expect, the Productivity segment has out-performed all other segments, mostly attributed to the emergence of wide-scale remote work.

Source: The Acadian Company, LLC, March 2020

The individual stocks of Zoom (+114%), Slack (+19%), and Atlassian (+14%) have performed extremely well as companies have shifted rapidly to remote working. It is important to note that Zoom now trades at 45x forward-looking revenue multiple.

Source: The Acadian Company, LLC, March 2020

Conversely, the Pay segment was also hit hard by the Coronavirus pandemic. Professional employer organizations (PEOs) and payroll companies have struggled in part due to shutdown of the SMB market and the huge increase in unemployment claims. “The Pays”, Paychex, Paycom and Paylocity, are down 26%, 24% and 27% respectively.

In addition to Pay, the Progression segment was hit hard over the last quarter. The combination of hiring freezes and slowing freelancer demand have impacted Recruit Holdings (-30%) and Upwork (-41%).

This quarter, we added Limeade to the index, due to their new public listing on the Australian Stock Exchange, and removed Instructure as a result of their acquisition by Thoma Bravo.

For more details, please visit our Future of Work Global Index page.

(Cross-posted @ Arcadian Insights – Jason Corsello)

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